The article of Shree Mukesh Patel, titled “Indian properties in NRI comfort zone!” published in the “The Times of India” daily of December 21, 2009 in “TAXING TIMES” column is published here with the courtesy of Shree “Mukesh Patel” and the “The Times of India”.

Indian properties in NRI comfort zone!

Liberal Regulations For Acquisition, Transfer & Repatriation Of Immovable Properties Held By Non-Residents
Source Link : The Times of India dated 21 December 2009

Thousands of non-resident Indians (NRIs) settled overseas fly frequently to India, the home of their hearts. Many of them yearn to have a land or house of their own in their native land, either for future settlement or even to share rental gains or just property appreciation. There are those who have come to acquire properties either by way of gifts or inheritance and desire to sell them and repatriate the proceeds overseas. This FAQ presentation on the liberal regulations in this regard will prove handy and useful both for NRIs and their relatives in India.

Is a non-resident eligible to purchase immovable property in India?

Under the general permission granted by Reserve Bank of India (RBI), every NRI being a citizen of India or a person of Indian origin (PIO), that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who at any time, held Indian passport, or who or either of whose father or grandfather was a citizen of India can freely purchase immovable property in India.
The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricutural land/plantation property/farm house in India.

Are any documents required to be filed with RBI after purchase?

No. An NRI/PIO, who has purchased residential/commercial property under general permission, is not required to file any documents with RBI.

How many properties can an NRI/PIO purchase under the general permission?

There is no restriction on the number of residential/commercial properties that can be purchased.

Can a person who had bought immovable property when he was a resident, continue to hold such property even after becoming an NRI/PIO?

Yes. He can continue to hold the residential/commercial property/agricultural land-/plantation property/farm house in India without the approval of RBI.

Can an NRI/PIO acquire immovable property in India either by way of gift or inheritance?

Yes. An NRI/PIO can freely acquire any immovable property by way of gift or inheritance either from a person resident in India or an NRI/PIO. However, agricultural land/plantation property/far-m house in India cannot be acquired by way of gift. The same can be received under inheritance.

Can an NRI/PIO sell or gift his immovable property?

An NRI/PIO can sell or gift his residential/commercial property in India to any person. However, an NRI/PIO can sell agricultural land/plantation property/farm house only to a person resident in India, who is a citizen of India.

Is an NRI/PIO eligible to repatriate the sale proceeds of immovable property?

An NRI/PIO can repatriate the sale proceeds of immovable property in India if the property was acquired out of foreign exchange sources — remitted through normal banking channels or by debit to NRE/FCNR account, to the extent of the purchase consideration paid for the property.
Repatriation of sale proceeds of residential property purchased by NRI/PIO out of foreign exchange is restricted to not more than two such properties. The capital gains can be credited to the NRO account from where the NRI/PIO may repatriate an amount up to $1 million per financial year as discussed below.

Can an NRI/PIO repatriate the sale proceeds deposited in NRO account?

The sale proceeds credited to an NRO account, in respect of an immovable property purchased out of rupee resources or acquired through gift or inheritance, can be repatriated by the NRI/PIO up to $1 million per financial year (April-March), which would also include sale proceeds of assets acquired by way of inheritance or settlement). Such repatriation is permitted for all bonafide purposes subject to satisfaction of the authorised bank maintaining the NRO account on payment of applicable taxes.

Can an NRI/PIO rent out the residential/commercial property purchased out of foreign exchange/rupee funds?

Yes. An NRI/PIO can rent out the property without the approval of RBI. Rent received can be credited to NRO/NRE account or remitted abroad. Powers have been delegated to the authorised banks to allow repatriation of current income like rent, dividend, pension, interest, etc, of an NRI/PIO based on appropriate certification by a chartered accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid or provided for.